The
de-merged arm of IDFC, IDFC Bank is a listed private sector bank among
the 19 private banks with the promoter IDFC holding 53%, with a market
cap of Rs. 20,000 cr and currently traded at a price of Rs. 59.85. The
stock listed on 06th Nov 2015 at a price of Rs. 72 and fell 5% intraday
on the day of listing itself.
After that it has
stabilized itself, though the traded volumes have dropped by 88% since
the day of listing as compared to today.
Before
I highlight the stock information, It is important to see the
performance of other banks in this sector. Over a 1 year period, banking
stocks have performed well and stocks like DCB Bank, Lakshmi Vikas
Bank, Federal Bank have given a return of 100% and there are other banks
which have given atleast 50% returns in the same period.
IDFC Bank has given a 26% return over 1 year, better than large banks like ICICI, Axis etc.
Now, coming to specifics on IDFC Bank, the basic info is as follows. I hope I don’t have to explain P.E., P/BV, F.V. etc.
The
2 year returns on this stock are negative (-15.7%). The stock is
currently trading below its 30, 50, 150, 200 day moving averages.
I
don’t think you need a CA or a financial analyst to look at the
quarterly numbers and balance sheet to decide if they are good or bad.
The net profit is very wayward and to even look for a trend we need to get the Q4 results before any analysis can be done.
If
you compare this bank with other bank’s financials, the numbers are not
that outstanding where in you can invest and forget about this stock
for the next 2 years.
Whatever
the case might be, since the bank has not completed even 2 years of
listed operations, it is better to wait, analyse the Q4 results, then do
a peer comparison and finally make a call to invest or not.
As compared to IDFC Bank, DCB & Federal Bank have better operations and financial parameters are much better.
One can consider IDFC Bank Only if they want to hold it for more than 6–7years and above!!
There are much better banks like DCB,Federal bank , City Union Bank, RBL bank and other NBFC like Cholamandalam investments, Edelweiss that may give very good multibagger returns in long term.
Asset
quality of IDFC bank and NPAlevels seem quite depressing as of now. It
will take a long time for their ratings to get upgraded.
IDFC bank has witnessed a sharp rise in gross non-performing assets which
went from 3.1% to 7% of gross advances. Gross NPAs were at ₹3,587 crore
as on end-December. Net NPA ratio increased from 1% to 2.6%.
NPA
ratio is used to measure the asset quality of the bank's loan books.
NPA are those assets for which interest is overdue for more than 3
months. Net NPA ratio above 1% is not healthy. If the NPA ratio for the
last 10 years stays below 1% then that is a sign of good management.
Keep
an eye on IDFC BANK's total provision for non performing assets.
Nothing eats away at a bank's profits more than loan loss provisions. A
huge spike up is not a good sign.
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Data credits: moneycontrol.com
